ITO 8(1)(2), MUMBAI V. CONCEPT REALTY & SECURITIES P.LTD, MUMBAI

ITA 5874/MUM/2012

• Counselvise Citation: 587419914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 26-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Fair market value; Wrong claim; Difference of opinion; Valuation report
• Section: 143(3)

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI .. , ; BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, J M ITA NO.5874/MUM/2012 ( / ASSESSMENT YEAR : 2005-06) ITO 8(1)(2), R.NO.205 2 ND FLOOR, AAYAKAR BHAVAN,M.K.RD. MUMBAI 400020 / VS. M/S. CONCEPT REALITY & SECURITIES PVT. LTD, TAINWALA HOUSE, ROAD NO.18, MIDC, ANDHERI(E), MUMBAI-400093 . / PAN : AABCC1240L (APPLICANT) .. RESPONDENT ) APPELLANT B Y : SHRI SANJEEV JAIN RESPONDENT B Y : SHRI M.C. NANIWADEKAR # % / DATE OF HEARING : 25-11-2013 # % / DATE OF PRONOUNCEMENT :03-01 -2013 / O R D E R PER P.M. JAGTAP, A.M . : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A) 16, MUMBAI DATED 24.07.2012 WHEREBY HE CANCE LED THE PENALTY OF RS.20,67,772/- IMPOSED BY THE AO U/S.271(1)(C). 2. THE ASSSESSEE IN THE PRESENT CASE IS A COMPANY W HICH IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF SHA RES AND TRANSPORTATION OF GOODS. THE RETURN OF INCOME FOR THE YEAR UNDER CONS IDERATION WAS FILED BY IT ON 13.10.2005 DECLARING A LOSS OF RS.4,49,083/-. IN THE ASSESSMENT COMPLETED U/S. 143(3) VIDE ORDER DATED 24.12.2007, THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED BY THE AO AT RS.52,01,723/- A FTER MAKING AN ITA NO. 5874/MUM/2012 2 ADDITION OF RS.56,50,806/- ON ACCOUNT OF EXCESSIVE PRICE PAID FOR PURCHASE OF SHARES TO THE PERSONS SPECIFIED U/S.40A(2)(B) OF THE ACT. IN THE QUANTUM PROCEEDINGS, THE SAID ADDITION MADE BY THE AO WAS D ELETED BY THE LEARNED CIT(A) WHEREAS THE SAME WAS CONFIRMED BY THE TRIBUN AL REVERSING THE ORDER OF THE LEARNED CIT(A) WHILE DISPOSING OFF THE APPEAL OF THE REVENUE VIDE ITS ORDER DATED 30.11.2010 PASSED IN ITA NO.45 22/M/09. THEREAFTER, A SHOW CAUSE NOTICE WAS ISSUED BY THE AO REQUIRING TH E ASSESSEE TO EXPLAIN WHY PENALTY U/S.271(1)(C) SHOULD NOT BE IMPOSED IN RESPECT OF THE ADDITION OF RS.56,50,806/- MADE TO ITS TOTAL INCOME U/S.40A( 2)(B). IN REPLY, THE FOLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE V IDE ITS LETTER DATED 07.03.2011: THE PROCEEDING RELATE TO A.Y.2005-06 FOR WHICH THE ASSESSEE HAD FILED RETURN DECLARING A LOSS OF RS.4,49,083/- ON 30.10.2 005. IN THE ASSESSMENT COMPLETED U/S.143(3) ON 24.12.2007 ON ADDITION OF R S.56,50,806/- WAS MADE U/S.40A(2)(B). THE PROVISIONS OF SEC. U/S.40A( 2)(B) WERE INVOKED ON PURCHASE OF 11,66,801 SHARES OF TAINWALA CHEMICALS AND PLASTICS (I) LTD. FOR RS.1,16,68,010/- . THESE SHARES WERE PURCHASED FROM M/S. KATYAM CONSTRUCTION & DEVELOPERS P.LTD & SHRI RAKESH TAINW ALA. THE PURCHASES WERE MADE AT FACT VALUE OF RS.10 WHICH WAS HIGHER T HAN THE PREVAILING MARKET VALUE AS QUOTED IN BOMBAY STOCK EXCHANGE. TH E PURCHASE PRICE PAID BY THE ASSSESSEE WAS SUPPORTED BY THE VALUATIO N REPORT. THE ADDITION MADE BY THE A.O. IN THE ASSESSMENT ORDER WAS DELETE D BY THE CIT(A) BUT IT HAS BEEN CONFIRMED BY THE ITAT. ON THE ABOVE FACTS IT IS THE RESPECTFUL SUBMISSION OF THE ASSESSEE THAT THERE IS NO CASE FO R PENALTY FOR THE REASONS AND SUBMISSION GIVEN IN THE FOLLOWING PARAGRAPHS. IT MAY KINDLY BE SEEN THAT THE ASSESSEE HAD DISCLOS ED ALL THE DETAILS ABOUT THE SHARE TRANSACTIONS IN THE RETURN OF INCOM E AND THE STATEMENTS ACCOMPANYING THE RETURN AND IN THE COURSE OF ASSESS MENT PROCEEDINGS AND NO PART OF THESE DETAILS AND PARTICULARS WERE FOUND TO BE FALSE OR INCORRECT. THE ASSESSEE HAD GIVEN THE VALUATION REPORT TO JUST IFY THE FALSE OR INCORRECT. THE ASSESSEE HAD GIVEN THE VALUATION REPORT TO JUST IFY THE FAIR MARKET VALUE AND IT WAS ALSO SHOWN THAT THE BOOK VALUE OF RS. 20 .33 WAS MUCH HIGHER THAN THE PURCHASE PRICE. IT WAS ALSO EXPLAINED THAT IF THE ASSESSEE HAD MADE THE PURCHASES OF SUCH HUGE QUANTITY OF SHARES FROM THE MARKET, THE SHARE PRICES WOULD HAVE SHOT UP TO MUCH HIGHER LEVE L AND THE ASSESSEE MIGHT HAVE BEEN REQUIRED TO PAY A MUCH HIGHER PRICE THAN WHAT IT ACTUALLY PAID. IT WAS THEREFORE APPARENT THAT THE ASSESSEE W AS NOT QUALITY OF CONCEALING ANY PARTICULARS OF INCOME OR FURNISHING OF INACCURATE ITA NO. 5874/MUM/2012 3 PARTICULARS OF INCOME. THE PRICE PAID WAS SUPPORTED BY VALUATION REPORT AND THE REASONS FOR PAYING HIGHER PRICE WERE ALSO E XPLAINED. AS FAR AS THE A.O. CONTENTION THAT THE ASSESSEES MOTIVE WAS TO C REATE LOSSES IN SHARE TRADING BUSINESS OF THAT THE LOSSES COULD BE SET OF F AGAINST THE BUSINESS PROFITS OF OTHER SOURCES OF BUSINESS INCOME OF TRAN SACTION AND COMMISSION IS TOTALLY BASELESS AS THE ASSESSEE HAS BROUGHT FOR WARD LOSSES OF RS.1,79,37,444/- AND RS.30,08,240/- FOR A.Y.2003-04 RESPECTIVELY. IN THE CIRCUMSTANCES EVEN THOUGH THE ADDITION HAS BEEN SUS TAINED BY THE ITAT THERE IS NO CASE FOR PENALTY U/S.271(1)(C). IT MAY KINDLY BE SEEN THAT THE ADDITION MADE BY THE A.O. WAS DELETED BY THE CIT(A). THE ORDER OF THE CIT(A) WAS HOWEVER REVERSED IN THE DEPARTMENTAL APPEAL. IN THE CIRCUMSTANCES WHEN THE ORDERS OF THE FIRST TWO APPELLATE AUTHORITIES ARE IN COMPLETE DISAGREEMENT OVER THE ASSESSED INCOME AND THE ADDITION MADE THEREIN THERE CANNOT B E ANY CASE OF LEVY OF PENALTY U/S.271(1)(C). IN THE CONTEXT OF DISALLOWAN CE U/S.40A(2)(B) THE COURTS HAVE TAKEN A VIEW THAT SUCH A DISALLOWANCE C ANNOT ENTAIL PENALTY U/S.271(1)(C)BECAUSE IT IS BASED ON A VIEW TO BE TA KEN BY THE A.O. ON THE GIVEN SET OF FACTS. THE ASSESSEE FILING THE RETURN CAN NEVER BE AWARE AS TO WHAT VIEW IS GOING TO BE TAKEN ON GIVEN SET OF FACT S. SUCH A DISALLOWANCE THEREFORE WOULD NOT PROVIDE A PROPER BASIS FOR PENA LTY. IN SUPPORT THE ASSESSEE QUOTED VARIOUS DECISIONS OF SUPREME COURT AND THE HIGH COURT. IN VIEW OF THE SUBMISSIONS AND THE AUTHORITIES CITE D HEREIN BEFORE IT IS MANIFEST THAT THE ADDITION HAS BEEN MADE DISREGA RDING THE SUBMISSION MADE BY THE ASSESSEE IN RESPECT OF PURCHASE CONSIDE RATION OF THE SHARES. THE DEPARTMENT HAS NOT MADE OUT A CASE THAT THE ASS ESSEE PAID LOWER PURCHASE PRICE AND DISCLOSED AN INFLATED PRICE WITH A MOTIVE TO EVADE TAX. COMPLETE DETAILS AND PARTICULARS WERE FURNISHED BEF ORE THE DEPARTMENT AND NO PART OF IT HAS FOUND TO BE FALSE OR INCORREC T. IN THE CIRCUMSTANCES PENALTY UNDER U/S.271(1)(C) IS NOT LEVIABLE AND THE PROCEEDINGS REQUIRED TO BE DROPPED. 3. THE EXPLANATION OFFERED BY THE ASSESSEE AS ABOVE WAS NOT FOUND SATISFACTORY BY THE AO AND RELYING ON THE DEC ISION OF THE TRIBUNAL CONFIRMING THE ADDITION MADE U/S.40A(2)(B) IN THE Q UANTUM PROCEEDINGS, HE HELD THAT THE ASSESSEE WAS GUILTY OF FURNISHING INA CCURATE PARTICULARS OF ITS INCOME BY CLAIMING HIGHER PURCHASE PRICE OF SHARES THAN THE PREVAILING MARKET RATES. ACCORDINGLY, HE IMPOSED A PENALTY OF RS.20,67,772/- U/S.271(1)(C) BEING 100% OF THE TAX SOUGHT TO BE EV ADE BY THE ASSESSEE IN RESPECT OF ADDITION OF RS.56,50,806/- MADE TO ITS T OTAL INCOME U/S.40A(2)(B). ITA NO. 5874/MUM/2012 4 4. THE PENALTY IMPOSED BY THE AO U/S.271(1)(C) WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LEARNED CIT( A) AND THE SUBMISSIONS MADE BEFORE THE AO WERE REITREATED BY THE ASSESSEE BEFORE LEARNED CIT(A) IN SUPPORT OF ITS STAND THAT PENALTY U/S.271(1)(C) IMPOSED BY THE AO IN RESPECT OF ADDITION MADE U/S.40A(2)(B) WAS NOT SUST AINABLE IN FACTS AND CIRCUMSTANCES OF ITS CASE. THE LEARNED CIT(A) FOUND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND CANCELED THE PENALT Y IMPOSED BY THE AO U/S.271(1)(C) FOR THE FOLLOWING REASONS GIVEN IN PA RAGRAPH 2.3.1 &2.3.2 OF HIS IMPUGNED ORDER. 2.3.1. I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT COMPANY AS WELL AS CAREFULLY GONE THROUGH THE AVAIL ABLE DOCUMENTS ON RECORD. I FIND THAT THE LD. AO MADE THE ADDITION ON THE GROUND THAT THE APPELLANT HAS INTER INTO A TRANSACTION WITH PERSONS SPECIFIC U/S.40A(2)(B) OF THE ACT. THE SECTION ENVISAGES THAT THE EXPENDITURE WHICH IS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS, SERVICES OR FACILITIES FOR WHICH THE PAYMENT WAS MADE OR BEN EFIT DERIVED OR ACCRUED TO ASSESSEE THERE FROM SO MUCH OF THE EXPENDITURE A S SO CONSIDERED BY AO TO BE EXCESSIVE OR REASONABLE SHALL NOT BE ALLOWED AS A DEDUCTION. THE LD. AO WAS OF THE VIEW THAT THE FAIR MARKET VALUE WILL BE THE MARKET VALUE OF THE SHARES AS PURCHASED BY THE APPELLANT AS INDICAT ED BY THE BOMBAY STOCK EXCHANGE. ON THE CONTRARY, THE APPELLANT WAS OF THE VIEW WAS THAT THE FAIR MARKET VALUE IS NOT MARKET VALUE BUT THE FAIR MARKE T VALUE AS DETERMINED BY THE APPELLANT ON THE SOUND ADVICE OF THE VALUER. THE FAIR VALUE SO DETERMINED BY THE VALUER OF THE SHARES WAS BASED ON PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF HLL EMP LOYEES UNION VS. HINDUSTAN LEVER LTD. REPORTED IN 33 COM CASES 30(SU PREME COURT). 2.3.2 MY LD. PRODECESSOR HAS DELETED THE AFORESAID ADDITION AS ACCORDING TO HIM THE FAIR MARKET VALUE IS NOT EQUIVALENT TO THE MARKET VALUE AS DETERMINED BY THE LD. AO. THE HONBLE ITAT VIDE ADJ UDICATING THE APPEAL OF THE REVENUE HELD THAT LD. CIT(A) HAS GONE TOO TE CHNICALLY IGNORING THE SPIRIT OF THE SECTION. THE HONBLE ITAT HAS THEREFO RE, HELD THAT THE BENEFIT ACCRUES TO THE ASSESSEE BY PAYING HIGHER AMOUNT WHI CH IN FACT IS THE EXCESS EXPENDITURE COVERED BY THE PROVISION SECTION 40A(2) (B). I FIND THAT THE APPELLANT HAD DISCLOSED THE ENTIRE FACT OF THE TRAN SACTIONS, TO THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THERE IS NOTHING I.E. HIDDEN OR FOUND TO BE INCORRECT BY THE LD. AO BOTH DURING THE ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS BEFORE H IM. THERE IS GENUINE DIFFERENCE OF OPINION BETWEEN THE AO AND THE APPELL ANT AS TO WHAT ITA NO. 5874/MUM/2012 5 CONSTITUTES THE FAIR MARKET VALUE OF THE SHARES. TH E LD. AO RELIED ON THE RATES PRESCRIBED BY THE BOMBAY STOCK EXCHANGE AS TH E COMPANY IN QUESTION IS A LIMITED COMPANY . HOWEVER, THE APPELL ANT RELIED ON THE REPORT SUBMITTED BY THE APPROVED VALUER, M/S. THINGNA AND CONTRACTOR, C.A WHO DETERMINED THE VALUE ON THE BASIS OF NET ASSET VALU E PER EQUITY SHARES AND MARKET VALUE AS PER EQUITY SHARES AND THEN BY ALLOC ATING THE WEIGHTS TO BOTH THE VALUATION AS ARRIVED AT BY THE AVERAGING I T OUT. THERE ARE APPELLANT DECISIONS TO FAVOUR THE VALUATION UNDERTA KEN BY THE APPELLANT AS REPORTED BY MY LD. PREDECESSORS IN HIS APPELLANT OR DER. HOWEVER, THE FACT REMAINED THAT THE APPELLANT HAS INCURRED EXCESSIVE EXPENDITURE IN PROCURING SHARES IN QUESTION. THEREFORE, AS FAR AS THE MERITS OF THE CASE ARE CONCERNED THE FACTS ARE AGAINST THE APPELLANT. NOW COMING TO THE LEVY OF PENALTY, THE POSITION OF THE LAW HAS BEEN CLARIF IED BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S REPORTED IN 322 ITR 158 WHEREIN THE SUPREME COURT HAS CLARIFIED THAT A MERE MAKING ALL A CLAIM WHICH IS SUSTAINABLE IN LAW BY ITSELF, WILL N OT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE, SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PART ICULARS. THEREFORE, THE HONBLE SUPREME COURT HAS CLARIFIED THE POSITION AS REGARDS THE CLAIM MADE BY THE APPELLANT WHICH SUBSEQUENTLY IS FOUND I NADMISSIBLE, SUCH CLAIM IS NOT A FALSE CLAIM. THE APPELLANT HAD PURCH ASE THE SHARES OF ITS SISTER CONCERNED AT THE RATE DISCLOSED TO THE DEPAR TMENT. HOWEVER, ON SCRUTINY THE DEPARTMENT FOUND THAT THE RATES ARE MO RE THAN THE MARKET RATE AND DISALLOW FOR EXCESS IN CLAIM. THE INTENTION OF BOTH THE APPELLANT AS WELL AS THE SISTER CONCERN WAS NOT TO EVADE TAX AS THE APPELLANT IS A LOSS MAKING CONCERN. THEREFORE, THE PENALTY LEVIED BY TH E LD. AO CANNOT BE SUSTAINED ON THE FACTS AND THE CIRCUMSTANCES OF THE APPELLANT CASE. IN VIEW OF THE HONBLE SUPREME COURT DECISION IN THE CASE O F RELIANCE PETRO PRODUCTS, IN MY OPINION IT IS NOT FIT CASE FOR LEVY OF PENALTY THE SAME IS ACCORDINGLY DELETED. THIS GROUND OF APPEAL IS THUS ALLOWED. AGGRIEVED BY THE ORDER OF LD. CIT(A) CANCELING THE PENALTY IMPOSED BY THE AO U/S.271(1)(C), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. THE LEARNED DR STRONGLY RELIED ON THE PENALTY OR DER PASSED BY THE AO IN SUPPORT OF THE REVENUES CASE THAT THE ASSESSEE HAVING FURNISHED INACCURATE PARTICULARS OF INCOME, IT IS A FIT CASE TO IMPOSE PENALTY U/S.271(1)(C). HE SUBMITTED THAT THE HIGHER PRICE P AID BY THE ASSESSEE FOR THE PURCHASE OF SHARES THAN THE PREVAILING MARKET VALUE WAS WITH A CLEAR ITA NO. 5874/MUM/2012 6 INTENTION TO FURNISH INACCURATE PARTICULARS OF ITS INCOME AND SINCE THE DEDUCTION CLAIMED BY THE ASSESSEE FOR SUCH HIGHER P RICE WAS NOT BONA FIDE, THE LEARNED CIT(A) IS NOT JUSTIFIED TO CANCEL THE P ENALTY IMPOSED BY THE AO U/S.271(1)(C). 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, STRONGLY SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A) CANCELLING THE PENALTY IMPOSED BY THE AO U/S.271(1)(C). HE SUBMITTED THAT THE PRICE PAID BY THE ASSESSEE FOR PURCHASE OF SHARES WAS DULY SUPPORTED BY THE VALUATION REPORT AND EVEN THE REASON FOR PURCHASING THE SAID SHARES AT HIGHER PRICE THAN THE PREVAILING MARKET PRICE WAS EXPLAINED BY THE ASSES SEE BEFORE THE AUTHORITIES BELOW. HE CONTENDED THAT THIS EXPLANATION OFFERED B Y THE ASSESSEE WAS PROPERLY APPRECIATED BY THE LEARNED CIT(A) TO COME TO THE CONCLUSION THAT THE CLAIM OF THE ASSESSEE WAS BONA FIDE AND SINCE A LL THE PARTICULARS RELATING TO THE SAID CLAIM WERE TRULY AND FULLY FURNISHED BY THE ASSESSEE, HE RIGHTLY CANCELED THE PENALTY IMPOSED BY THE AO U/S.271(1)(C ). HE ALSO CONTENDED THAT THE ADDITION U/S.40A(2)(B) WAS MADE ON THE BAS IS OF ESTIMATE OF VALUATION OF SHARES AND AS HELD BY MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF JHAVAR PROPERTIES P. LTD. VS. 123 ITD 429, NO PE NALTY U/S.271(1)(C) CAN BE IMPOSED IN RESPECT OF ADDITION MADE U/S.40A(2)( B). 7. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT AL THOUGH THE PRICE PAID BY THE ASSESSEE FOR PURCHASE OF SHARE AT RS. 10 PER SHARE WAS FOUND TO BE EXCESSIVE THAN THE PRICE AT WHICH THE SAID SHARES WERE BEING TRADED ON BOMBAY STOCK EXCHANGE AND ADDITION TO THE EXTENT OF SUCH EXCESS VALUE MADE BY THE AO WAS SUSTAINED BY THE TRIBUNAL IN THE QUANTUM PROCE EDINGS, THE FACT REMAINS THAT THE PRICE OF RS.10 PER SHARE PAID BY THE ASSES SEE WAS DULY SUPPORTED BY ITA NO. 5874/MUM/2012 7 THE VALUATION OF SHARES DETERMINED BY THE APPROVED VALUER ON THE BASIS OF NET ASSET VALUE PER EQUITY SHARE. THE REASONS FOR P AYING HIGHER PRICE FOR THE SHARES PURCHASED IN BULK THAN THE STOCK EXCHANGE PR ICE WERE ALSO EXPLAINED BY THE ASSESSEE BY SUBMITTING THAT THE SAID SHARES WERE NOT WIDELY TRADED IN THE MARKET AND THE PURCHASE OF BULK QUANTITY OF SHA RES WAS POSSIBLE ONLY FROM A FEW TARGETED HOLDERS AND NOT FROM THE OPEN M ARKET. IT WAS EXPLAINED THAT SUCH TRANSACTIONS OF BULK PURCHASES GENERALLY CARRY PREMIUM AND THE PRICE OF RS.10 PER SHARE WAS ARRIVED AT AFTER NEGOT IATION WITH THE SELLER. IT WAS ALSO POINTED OUT THAT ANY ATTEMPT TO PURCHASE T HE SHARES IN SUCH BULK QUANTITY DIRECTLY FROM THE OPEN MARKET WOULD HAVE R ESULTED IN INCREASE IN THE PRICE OF SHARES ON THE STOCK EXCHANGE RESULTING INTO A LOSS TO THE ASSESSEE. HAVING REGARD TO ALL THESE FACTS OF THE C ASE, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE OF HAVING PAID A SHARE PR ICE OF RS.10 PER SHARE WAS A BONA FIDE CLAIM AND ALTHOUGH THE SAME WAS NOT ACCEPTED AND T HE EXCESS VALUE ALLEGEDLY PAID BY THE ASSESSEE WAS DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B), WE ARE OF THE VIE W THAT THE ASSESSEE CANNOT BE HELD TO BE GUILTY OF FURNISHING OF INACCURATE PA RTICULARS OF ITS INCOME WHEN ALL THE MATERIAL PARTICULARS RELEVANT TO THIS CLAIM WERE FULLY AND TRULY FURNISHED BY THE ASSESSEE. IN THE CASE OF RELIANCE PETRO PRODUCT 322 ITR158, HONBLE SUPREME COURT HAS HELD THAT A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE WHEN THE ASSESSEE IS FOUND TO HAVE FURNISHED ALL THE MATERIA L PARTICULARS RELATING TO SUCH CLAIM FULLY AND ACCURATELY. IN THE CASE OF JHA VAR PROPERTIES P. LTD. VS. ACIT 123 ITD 429 CITED BY THE LEARNED COUNSEL FOR T HE ASSESSEE, PENALTY U/S.271(1)(C) IMPOSED IN RESPECT OF ADDITION MADE U /S.40(2)(B) WAS CANCELED BY THE TRIBUNAL HOLDING THAT THE SAID PROVISION BY ITS VERY NATURE IS SOMETHING WHICH THE ASSESSING OFFICER HAS TO DETERM INE BY USING HIS ITA NO. 5874/MUM/2012 8 DISCRETION, SUBJECT TO LIMITATION LAID DOWN IN THIS BEHALF IN THE SAID PROVISION. IT WAS HELD THAT DISALLOWANCE MADE U/S.4 0A(2)(B) THUS COULD NOT BE CONSIDERED AS CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS WARRANTING LEVY OF PENALTY U/S.271(1)(C ). KEEPING IN VIEW THE RATIO OF THESE JUDICIAL PRONOUNCEMENTS AND HAVING T HE REGARD TO THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE LEARNED CIT(A ) WAS FULLY JUSTIFIED IN CANCELING THE PENALTY IMPOSED BY THE AO U/S.271(1)( C) AND UPHOLDING HIS IMPUGNED ORDER, WE DISMISS THIS APPEAL OF THE REVEN UE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.01.2014. # , - 03.01.2014 # SD/- SD/- (VIVEK VARMA) ( P.M. JAGTAP ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; - DATED 03.01.2014 .../ A.K.PATEL , PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. 7 / THE APPELLANT 2. 897 / THE RESPONDENT. 3. : () / THE CIT(A)- MUMBAI CONCERNED 4. : / CIT MUMBAI CONCERNED 5. 8> , % > , / DR, ITAT, MUMBAI G BENCH 6. / GUARD FILE. / BY ORDER, 9 8 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI